1 00:00:00,680 --> 00:00:05,600 Speaker 1: Welcome to zero. I'm akshatrati this week canaries, coal mines 2 00:00:05,880 --> 00:00:20,599 Speaker 1: and a call for cash. Every now and then I 3 00:00:20,640 --> 00:00:23,360 Speaker 1: get to hear an idea that, if it's pulled off, 4 00:00:23,440 --> 00:00:27,639 Speaker 1: will be truly transformational. This episode is about one of 5 00:00:27,680 --> 00:00:31,360 Speaker 1: those ideas. At COP twenty seven last year, there was 6 00:00:31,400 --> 00:00:34,760 Speaker 1: a moment that took the conference by storm. Mia Motley, 7 00:00:34,840 --> 00:00:37,280 Speaker 1: the Prime Minister of Barbados, took to the stage in 8 00:00:37,320 --> 00:00:40,320 Speaker 1: front of world leaders and in a blistering speech, gave 9 00:00:40,360 --> 00:00:42,440 Speaker 1: her vision to fix the climate crisis. 10 00:00:42,960 --> 00:00:46,879 Speaker 2: I come from a small island state that has high ambition, 11 00:00:47,200 --> 00:00:50,280 Speaker 2: but that is not able to deliver on that high 12 00:00:50,320 --> 00:00:55,480 Speaker 2: ambition because the global industrial strategy that we have has 13 00:00:55,560 --> 00:00:56,480 Speaker 2: fault lines in it. 14 00:00:57,640 --> 00:01:01,360 Speaker 1: Typically at these meetings, poor countries ask for money from 15 00:01:01,440 --> 00:01:04,800 Speaker 1: rich countries and don't get it. It's a reasonable demand 16 00:01:05,000 --> 00:01:08,080 Speaker 1: because poor countries didn't cause the problem, but need to 17 00:01:08,080 --> 00:01:11,200 Speaker 1: be a part of the solution. So to break the deadlock, 18 00:01:11,440 --> 00:01:13,160 Speaker 1: Motley had a different idea. 19 00:01:13,360 --> 00:01:14,119 Speaker 3: She proposed a. 20 00:01:14,040 --> 00:01:17,520 Speaker 1: Plan to unlock trillions of dollars in private investments that 21 00:01:17,600 --> 00:01:21,240 Speaker 1: could turbocharge the buildout of climate solutions like solar and 22 00:01:21,280 --> 00:01:23,280 Speaker 1: wind power in developing countries. 23 00:01:23,920 --> 00:01:27,720 Speaker 2: The global North borrows interest rates of between one to 24 00:01:27,800 --> 00:01:33,200 Speaker 2: four percent, the global South of fourteen percent. This is 25 00:01:33,240 --> 00:01:37,640 Speaker 2: the ball reality, and we have come here to ask 26 00:01:37,760 --> 00:01:42,000 Speaker 2: us to open our minds to different possibilities. We believe 27 00:01:42,040 --> 00:01:42,880 Speaker 2: that we have a plan. 28 00:01:44,000 --> 00:01:46,679 Speaker 1: That plan is known as the Bridgetown Initiative, and it 29 00:01:46,760 --> 00:01:49,920 Speaker 1: calls for the reform of the current global financial system 30 00:01:50,080 --> 00:01:52,600 Speaker 1: that was built in the aftermath of World War Two. 31 00:01:53,120 --> 00:01:56,760 Speaker 1: At that time, half of today's countries didn't exist. The 32 00:01:56,800 --> 00:02:00,240 Speaker 1: country I was born in, India, was still a British colony. 33 00:02:00,880 --> 00:02:03,680 Speaker 1: And yet that system, made up of institutions like the 34 00:02:03,720 --> 00:02:07,040 Speaker 1: World Bank and the International Monetary Fund, continue to be 35 00:02:07,120 --> 00:02:12,160 Speaker 1: crucial to helping developing countries develop further. In twenty twenty one, 36 00:02:12,360 --> 00:02:16,440 Speaker 1: these so called multilateral development banks spend fifty one billion 37 00:02:16,480 --> 00:02:19,959 Speaker 1: dollars on climate finance, which sounds like a lot of money, 38 00:02:20,200 --> 00:02:24,480 Speaker 1: but it's nowhere near enough to meet climate goals. My 39 00:02:24,520 --> 00:02:27,600 Speaker 1: guest today hopes to hugely increase that figure and is 40 00:02:27,639 --> 00:02:31,480 Speaker 1: the architect of the Bridgetown Initiative. Avinage Persode. He's the 41 00:02:31,520 --> 00:02:35,240 Speaker 1: Special Envoy on Investment and Financial Services for Barbados and 42 00:02:35,280 --> 00:02:37,400 Speaker 1: a key advisor to Mia Motley. 43 00:02:37,480 --> 00:02:39,720 Speaker 3: Where Canaries in the mind, and you could either think, well, 44 00:02:39,760 --> 00:02:41,560 Speaker 3: how do I get some little bit of air for me? 45 00:02:41,680 --> 00:02:45,040 Speaker 3: I'm watching these other canaries in the mind being severely 46 00:02:45,360 --> 00:02:49,480 Speaker 3: starved of oxygen, or you could try and fix the mind. 47 00:02:50,240 --> 00:02:53,600 Speaker 3: And that's the only fundamental way of solving this problem. 48 00:02:54,120 --> 00:02:57,280 Speaker 1: In its simplest form, Bridgetown asks for one big thing, 49 00:02:58,000 --> 00:03:01,399 Speaker 1: using the power of these giant financial institutions to make 50 00:03:01,440 --> 00:03:05,120 Speaker 1: it far less risky to invest money in climate solutions 51 00:03:05,160 --> 00:03:08,880 Speaker 1: in developing countries, turning a trickle of billions into a 52 00:03:08,919 --> 00:03:13,440 Speaker 1: flood of trillions. Together with Prime Minister Motley, Avinash will 53 00:03:13,440 --> 00:03:16,680 Speaker 1: be presenting an updated version of the Bridgetown plan at 54 00:03:16,680 --> 00:03:19,720 Speaker 1: a big summit in Paris being hosted by French President 55 00:03:19,800 --> 00:03:24,720 Speaker 1: Emmanuel Macron next week. The global financial system is complicated 56 00:03:25,080 --> 00:03:28,560 Speaker 1: and so are the solutions to fix it. However, without 57 00:03:28,639 --> 00:03:31,720 Speaker 1: those fixes, there is little chance of meeting climate goals. 58 00:03:32,280 --> 00:03:34,480 Speaker 1: So it's great to get a chance to question one 59 00:03:34,480 --> 00:03:37,920 Speaker 1: of the smartest people working on these solutions. I sat 60 00:03:37,920 --> 00:03:40,320 Speaker 1: down with Avinash ahead of the summit to discuss some 61 00:03:40,440 --> 00:03:43,200 Speaker 1: of his fixes and why he thinks now is the 62 00:03:43,240 --> 00:03:55,720 Speaker 1: time these aging financial institutions will be finally reformed. Avinash 63 00:03:55,760 --> 00:03:56,520 Speaker 1: welcome to the show. 64 00:03:56,640 --> 00:03:57,000 Speaker 3: Thank you. 65 00:03:57,400 --> 00:04:00,280 Speaker 1: How did you go from being born in Barbados to 66 00:04:00,520 --> 00:04:04,840 Speaker 1: trying to fix the global financial architecture for the climate era. 67 00:04:05,240 --> 00:04:08,200 Speaker 3: Well, I left Barbados when I was seven years old, 68 00:04:08,320 --> 00:04:11,680 Speaker 3: but I do think that it left a lasting impression 69 00:04:12,080 --> 00:04:15,800 Speaker 3: on me. My father used to when we arrived in 70 00:04:15,840 --> 00:04:19,320 Speaker 3: Northwest London. This is in the nineteen seventies, there weren't 71 00:04:19,320 --> 00:04:22,440 Speaker 3: many people of color, and he said to me, you 72 00:04:22,640 --> 00:04:26,240 Speaker 3: are the ambassador to Barbadis for Northwest London. So I'd 73 00:04:26,279 --> 00:04:28,880 Speaker 3: been going around the place being very proud of Barbados, 74 00:04:28,880 --> 00:04:31,919 Speaker 3: saying good morning to all these Brits who were startled 75 00:04:32,480 --> 00:04:34,680 Speaker 3: that some stranger in the street would say good morning 76 00:04:34,680 --> 00:04:37,520 Speaker 3: to them at aged seven. So it had a lasting 77 00:04:37,520 --> 00:04:40,120 Speaker 3: impression on me, but I ended up. My dad was 78 00:04:40,120 --> 00:04:43,039 Speaker 3: a development economist. He was involved in a lot of 79 00:04:43,080 --> 00:04:47,039 Speaker 3: the big struggles of the nineteen eighties, like anti apartheid. 80 00:04:47,120 --> 00:04:50,359 Speaker 3: He helped write the sanctions against South Africa, some of 81 00:04:50,400 --> 00:04:54,359 Speaker 3: the first commissions on the environment, the Brutland Commission. That 82 00:04:54,480 --> 00:04:57,400 Speaker 3: excited me. So I wanted to be a development economist, 83 00:04:58,000 --> 00:05:01,880 Speaker 3: and he said to me he'd fund my first degree, 84 00:05:02,120 --> 00:05:04,279 Speaker 3: but not my second. So I got a job in 85 00:05:04,320 --> 00:05:07,240 Speaker 3: the city of London, and I was quite good at 86 00:05:07,279 --> 00:05:10,119 Speaker 3: it and quite enjoyed the fact that people were listening 87 00:05:10,200 --> 00:05:12,799 Speaker 3: to me. And if I development economists, people began listening 88 00:05:12,880 --> 00:05:16,960 Speaker 3: to me because finance is the rub of most problems. 89 00:05:17,080 --> 00:05:19,640 Speaker 1: Now Mia and Motley is the Prime Minister of Barbados 90 00:05:19,760 --> 00:05:24,800 Speaker 1: and has become a star in climate circles as a 91 00:05:24,960 --> 00:05:29,400 Speaker 1: voice that is giving importance to finance and how to 92 00:05:29,480 --> 00:05:32,920 Speaker 1: move billions to trillions. She gave this defining speech at 93 00:05:32,920 --> 00:05:35,520 Speaker 1: both COP twenty six in Glasgow and then COP twenty 94 00:05:35,520 --> 00:05:39,239 Speaker 1: seven in Shammel Shaken, Egypt, about the vulnerability of small 95 00:05:39,279 --> 00:05:42,120 Speaker 1: island states to climate change. Now, how did you end 96 00:05:42,200 --> 00:05:44,679 Speaker 1: up working with Mia Motley on these issues? 97 00:05:44,880 --> 00:05:48,800 Speaker 3: Well, Prime Minister Motley and I met at college aged eighteen, 98 00:05:49,320 --> 00:05:52,200 Speaker 3: here at the London School Economics. She was studying law, 99 00:05:52,320 --> 00:05:54,440 Speaker 3: I was doing economics, and so that's how I ended 100 00:05:54,520 --> 00:05:59,279 Speaker 3: up getting to know her. Years years later, I'm back 101 00:05:59,279 --> 00:06:03,640 Speaker 3: in Barbados advising her on her finance and budgets. And 102 00:06:03,680 --> 00:06:08,240 Speaker 3: we have the most horrific hurricane season. It's twenty seventeen, 103 00:06:08,800 --> 00:06:13,600 Speaker 3: two category five monster hurricanes. I mean, when you see 104 00:06:13,600 --> 00:06:17,240 Speaker 3: the satellite pictures, these hurricanes are bigger than the entire 105 00:06:18,080 --> 00:06:23,000 Speaker 3: chain of islands, and it crashes Dominica. They lose two 106 00:06:23,160 --> 00:06:27,720 Speaker 3: hundred and twenty six percent of GDP in four hours. 107 00:06:27,920 --> 00:06:31,120 Speaker 3: So anyway, she sends me off and says, this is 108 00:06:31,200 --> 00:06:34,000 Speaker 3: the time U economists need to step up. Here's a 109 00:06:34,040 --> 00:06:36,560 Speaker 3: country that needs some support. And so I was involved 110 00:06:36,560 --> 00:06:40,040 Speaker 3: in helping them and develop their plants after the hurricane. 111 00:06:40,400 --> 00:06:42,640 Speaker 3: And that was really, to be honest with you, and 112 00:06:42,680 --> 00:06:44,720 Speaker 3: I'm not particularly proud of it, but it was only 113 00:06:44,800 --> 00:06:50,479 Speaker 3: that point that I really began understanding climate change and 114 00:06:50,720 --> 00:06:55,120 Speaker 3: the impact on countries who were climate vulnerable. What were 115 00:06:55,160 --> 00:06:59,080 Speaker 3: the financial and economic consequences of this, and what the 116 00:06:59,120 --> 00:07:02,680 Speaker 3: global system. How everyone said that they cared, but how 117 00:07:02,680 --> 00:07:04,640 Speaker 3: there was actually the end of the day, very little money. 118 00:07:04,960 --> 00:07:07,840 Speaker 1: And just so we have the contexts because you go 119 00:07:07,960 --> 00:07:12,000 Speaker 1: from meeting her in university to then working for her, 120 00:07:12,240 --> 00:07:16,400 Speaker 1: advising her on her budgets. What were the intervening years, like, 121 00:07:16,600 --> 00:07:19,440 Speaker 1: you know, how was she as a person you knew 122 00:07:19,480 --> 00:07:22,400 Speaker 1: in university and now you know as a colleague. 123 00:07:22,520 --> 00:07:25,080 Speaker 3: Well we would connect from time to time, but she 124 00:07:25,320 --> 00:07:30,120 Speaker 3: moved back to Barbados. She was always committed to being 125 00:07:30,160 --> 00:07:33,960 Speaker 3: involved in the development of her country, our country. I 126 00:07:34,080 --> 00:07:36,440 Speaker 3: went off with a career in finance and ended up 127 00:07:36,520 --> 00:07:40,560 Speaker 3: being one of the architects of the new international financial 128 00:07:40,560 --> 00:07:45,560 Speaker 3: regulation Basil III macroprudential regulation. And she was observing this 129 00:07:45,920 --> 00:07:49,200 Speaker 3: and observing my work in this area. So when she 130 00:07:49,280 --> 00:07:53,000 Speaker 3: was asked to give a budget in Barbados, she asked 131 00:07:53,040 --> 00:07:55,800 Speaker 3: me to come along and help her with that budget. 132 00:07:56,000 --> 00:07:59,320 Speaker 3: And I came back, and she's a very effective politician, 133 00:07:59,600 --> 00:08:01,600 Speaker 3: And I thought I was coming back to write one speech, 134 00:08:01,680 --> 00:08:05,760 Speaker 3: and I've ended up living there and changing my entire 135 00:08:05,800 --> 00:08:06,800 Speaker 3: career and everything. 136 00:08:07,080 --> 00:08:11,080 Speaker 1: So you visit Dominica and you realize that climate change 137 00:08:11,080 --> 00:08:14,920 Speaker 1: is going to be a massive problem for countries like Barbados. 138 00:08:15,240 --> 00:08:18,320 Speaker 1: But then the solutions that you ended up developing is 139 00:08:18,360 --> 00:08:22,480 Speaker 1: not just addressing the problems of climate vulnerable countries, but 140 00:08:22,600 --> 00:08:27,960 Speaker 1: trying to fix the entire global financial architecture, which is great, 141 00:08:28,000 --> 00:08:30,960 Speaker 1: But how do you go from that problem, which is 142 00:08:31,200 --> 00:08:34,840 Speaker 1: local caused by a global crisis, to trying to address 143 00:08:34,960 --> 00:08:37,000 Speaker 1: a global crisis of another sort. 144 00:08:37,280 --> 00:08:41,240 Speaker 3: Well, we're sitting there thinking about why is it that 145 00:08:41,480 --> 00:08:45,679 Speaker 3: we're in this situation. Small island states in the tropics, 146 00:08:46,040 --> 00:08:49,120 Speaker 3: I mean, climate funderable countries are not just small states 147 00:08:49,480 --> 00:08:54,120 Speaker 3: or island states. There really any country between the tropics 148 00:08:54,120 --> 00:08:58,480 Speaker 3: of Cancer and the Tropic of Capricorn. Within that band, 149 00:08:58,600 --> 00:09:01,720 Speaker 3: that's where temperatures are rising to some of the highest 150 00:09:01,800 --> 00:09:06,400 Speaker 3: levels and where sea levels are increasing to the highest levels. 151 00:09:06,440 --> 00:09:09,079 Speaker 3: I mean, I'm an economist, so I know no science. 152 00:09:09,960 --> 00:09:11,880 Speaker 3: I have to be explained to me that when the 153 00:09:11,880 --> 00:09:15,120 Speaker 3: glaciers melt at the poles, that the water doesn't stay 154 00:09:15,160 --> 00:09:18,360 Speaker 3: there because of the spinning of the earth. The water 155 00:09:18,520 --> 00:09:21,080 Speaker 3: ends up on the equator, and so our sea levels 156 00:09:21,080 --> 00:09:24,040 Speaker 3: will rise by three quarters of meter or more. So 157 00:09:24,160 --> 00:09:28,160 Speaker 3: low lying areas in the tropics are very vulnerable. So 158 00:09:28,320 --> 00:09:30,079 Speaker 3: we're sitting there where canaries in the mine, and you 159 00:09:30,120 --> 00:09:32,200 Speaker 3: could either think, well, how do I get some little 160 00:09:32,240 --> 00:09:34,360 Speaker 3: bit of air for me I'm watching these other canaries 161 00:09:34,360 --> 00:09:40,240 Speaker 3: in the mine being severely starved of oxygen, or you 162 00:09:40,240 --> 00:09:43,000 Speaker 3: can try and fix the mine. And that's the only 163 00:09:43,080 --> 00:09:47,040 Speaker 3: fundamental way of solving this problem. And that's about not 164 00:09:47,400 --> 00:09:52,600 Speaker 3: just our loss and damage and climate adaptation and resilience. 165 00:09:53,160 --> 00:09:57,480 Speaker 3: The biggest story is climate mitigation. There we see the 166 00:09:57,559 --> 00:10:00,760 Speaker 3: countries who could do something about it looking at each 167 00:10:00,760 --> 00:10:04,240 Speaker 3: other across the table and pointing each other and all 168 00:10:04,280 --> 00:10:06,800 Speaker 3: of them saying that this is very important, this is 169 00:10:06,880 --> 00:10:09,560 Speaker 3: very urgent, and you, pointing across the table, need to 170 00:10:09,559 --> 00:10:11,880 Speaker 3: do more about it, and we're stuck. 171 00:10:12,160 --> 00:10:15,240 Speaker 1: And you wrote a paper that defined the problem as 172 00:10:15,280 --> 00:10:18,640 Speaker 1: a deadlock. And it's really precisely the word to be 173 00:10:18,760 --> 00:10:22,120 Speaker 1: used in this case, because I've been to COP meetings before. 174 00:10:22,520 --> 00:10:25,800 Speaker 1: These are places where rich countries and poor countries come 175 00:10:25,840 --> 00:10:30,080 Speaker 1: together and the finger pointing gets really problematic. Rich countries 176 00:10:30,080 --> 00:10:32,480 Speaker 1: would say to poor country as well, we understand we 177 00:10:32,559 --> 00:10:35,480 Speaker 1: cause this problem, but you now need to reduce emissions too, 178 00:10:35,520 --> 00:10:38,880 Speaker 1: because otherwise we don't have the carbon space available to 179 00:10:38,960 --> 00:10:41,440 Speaker 1: deal with this problem. And then poor countries would go, 180 00:10:41,760 --> 00:10:43,800 Speaker 1: we can do that if you give us money. Where 181 00:10:43,840 --> 00:10:46,560 Speaker 1: is the money? And that money never comes. And so 182 00:10:47,240 --> 00:10:49,400 Speaker 1: one way to think about the climate problem is really 183 00:10:49,400 --> 00:10:53,160 Speaker 1: it's a finance problem, and so it's understandable that trying 184 00:10:53,160 --> 00:10:56,600 Speaker 1: to address it through the finance lens is crucial. So 185 00:10:56,880 --> 00:10:59,760 Speaker 1: what is it that you think will unlock it. 186 00:11:00,040 --> 00:11:02,600 Speaker 3: Well, I think it's important to say that two years ago, 187 00:11:03,080 --> 00:11:06,600 Speaker 3: the prevailing view was it was an ignorance problem. It 188 00:11:06,640 --> 00:11:10,240 Speaker 3: was a science problem. People didn't believe the science. They 189 00:11:10,240 --> 00:11:13,200 Speaker 3: were in denial they just didn't believe it, and we 190 00:11:13,200 --> 00:11:15,760 Speaker 3: were listening to people were thinking, that's not the problem. 191 00:11:16,320 --> 00:11:19,360 Speaker 3: The problem is that that everyone believes someone else should 192 00:11:19,360 --> 00:11:22,520 Speaker 3: be doing more. And our issue was the only way 193 00:11:22,559 --> 00:11:26,560 Speaker 3: we could get around that problem is finance. Why do 194 00:11:26,640 --> 00:11:29,559 Speaker 3: they believe someone else should do more because it's a 195 00:11:29,640 --> 00:11:32,120 Speaker 3: cost to them to do it. So if we can 196 00:11:32,160 --> 00:11:34,679 Speaker 3: make it easy for them to do it, we can 197 00:11:34,720 --> 00:11:38,040 Speaker 3: reduce the cost for them, we can finance it. They 198 00:11:38,040 --> 00:11:40,200 Speaker 3: won't spend their time pointing their finger to someone else. 199 00:11:40,320 --> 00:11:41,319 Speaker 3: They will get it done. 200 00:11:41,720 --> 00:11:45,720 Speaker 1: And so Dominica happens. You go back and you start 201 00:11:45,800 --> 00:11:48,240 Speaker 1: working on trying to solve this problem. This is back 202 00:11:48,240 --> 00:11:52,439 Speaker 1: in twenty seventeen eighteen nineteen period. You put out what 203 00:11:52,559 --> 00:11:55,880 Speaker 1: is called a Bridgetown Agenda, named after the capital of 204 00:11:56,120 --> 00:12:00,280 Speaker 1: Barbados last year, and you're now this month coming out 205 00:12:00,280 --> 00:12:03,839 Speaker 1: with an update to that agenda. Let's go through the 206 00:12:03,880 --> 00:12:06,640 Speaker 1: broad strokes of what that agenda does and how it 207 00:12:06,679 --> 00:12:08,439 Speaker 1: addresses this finance problem. 208 00:12:08,559 --> 00:12:13,920 Speaker 3: So the experts say that developing countries need two point 209 00:12:13,960 --> 00:12:19,160 Speaker 3: four trillion dollars every year to deal with climate. So 210 00:12:19,200 --> 00:12:24,120 Speaker 3: that's mitigating the climate, preventing it getting worse. That's resilience 211 00:12:24,200 --> 00:12:28,080 Speaker 3: and adapting to the existing change in the climate, and 212 00:12:28,120 --> 00:12:31,160 Speaker 3: that's also addressing the loss and damage. So you add 213 00:12:31,200 --> 00:12:34,520 Speaker 3: all that together two point four trillion dollars. Now, of 214 00:12:34,600 --> 00:12:38,439 Speaker 3: course few people can imagine two point four trillion dollars. 215 00:12:38,880 --> 00:12:40,880 Speaker 3: So I think the way to think about this is 216 00:12:40,920 --> 00:12:44,199 Speaker 3: that all of the aid in the world add up 217 00:12:44,320 --> 00:12:49,160 Speaker 3: everything for everything is two hundred billion dollars per year. 218 00:12:49,520 --> 00:12:54,080 Speaker 3: So we're talking about something that is twelve times more 219 00:12:54,200 --> 00:12:58,200 Speaker 3: than what's currently happening every year. Twelve times, and so 220 00:12:58,400 --> 00:12:59,800 Speaker 3: you know you've got a problem because you know they 221 00:12:59,880 --> 00:13:02,800 Speaker 3: might be ab to increase it by ten percent, no 222 00:13:02,840 --> 00:13:07,120 Speaker 3: one's increasing it by twelve times. So bridge down is 223 00:13:07,160 --> 00:13:10,240 Speaker 3: the solution to get to the twelve times. So we 224 00:13:10,320 --> 00:13:14,240 Speaker 3: say we can't do it, but it needs three different 225 00:13:14,840 --> 00:13:20,720 Speaker 3: buckets of financing. The first bucket the biggest bucket. It's 226 00:13:21,000 --> 00:13:25,040 Speaker 3: stuff you have to do which has a revenue stream attached. 227 00:13:25,559 --> 00:13:28,360 Speaker 3: You can do it and it makes money. So you know, 228 00:13:28,480 --> 00:13:33,520 Speaker 3: building a solar farm makes money, a wind turbine makes money, 229 00:13:33,600 --> 00:13:38,280 Speaker 3: a hydroelectric power makes money. So inside this bucket is 230 00:13:38,280 --> 00:13:41,040 Speaker 3: a lot of things that make money but will mitigate 231 00:13:41,080 --> 00:13:43,800 Speaker 3: the climate, will prevent it getting worse will help us 232 00:13:43,800 --> 00:13:47,679 Speaker 3: in the green transformation. What we need to do to 233 00:13:47,760 --> 00:13:50,320 Speaker 3: fill that bucket is we need to find a way 234 00:13:50,320 --> 00:13:53,800 Speaker 3: of catalyzing the private sector to get them into doing 235 00:13:53,840 --> 00:13:57,480 Speaker 3: this in developing countries. They're doing this in the rich countries. 236 00:13:57,600 --> 00:14:03,160 Speaker 3: Eighty one percent of all time mitigation green transformation stuff 237 00:14:03,280 --> 00:14:07,480 Speaker 3: is financed by the private sector in rich countries, but 238 00:14:07,679 --> 00:14:11,679 Speaker 3: only fourteen percent in the poor countries. So we've got 239 00:14:11,679 --> 00:14:14,320 Speaker 3: to change that equation. And we've got a solution to it. 240 00:14:14,320 --> 00:14:20,480 Speaker 3: It's around guaranteeing the foreign exchange risk that the private 241 00:14:20,600 --> 00:14:22,800 Speaker 3: investor has when they go to development countries. But we 242 00:14:22,800 --> 00:14:23,480 Speaker 3: can come back to that. 243 00:14:23,600 --> 00:14:26,560 Speaker 1: Yes, I mean, that's the hardest solution to get your 244 00:14:26,600 --> 00:14:30,160 Speaker 1: head around, but it also is the biggest problem to address. 245 00:14:30,760 --> 00:14:32,640 Speaker 1: And then the two other buckets. 246 00:14:32,800 --> 00:14:36,480 Speaker 3: So the second bucket, second biggest, This is for things 247 00:14:36,520 --> 00:14:40,760 Speaker 3: which they are no revenues, but they are savings. And 248 00:14:40,840 --> 00:14:44,240 Speaker 3: so if there are no revenues but savings, you can 249 00:14:44,520 --> 00:14:47,200 Speaker 3: borrow to fill this bucket. Now, what's in this bucket. 250 00:14:47,440 --> 00:14:52,160 Speaker 3: This is stuff like a sea wall. You don't make 251 00:14:52,240 --> 00:14:54,840 Speaker 3: money from having a sea wall, but you save money 252 00:14:54,920 --> 00:14:57,840 Speaker 3: from all the times that the capital city is not 253 00:14:57,960 --> 00:15:01,640 Speaker 3: flooded because you've got this new sea wall. All very 254 00:15:01,760 --> 00:15:05,480 Speaker 3: unglamorous stuff, but very very important and saves a lot 255 00:15:05,520 --> 00:15:09,640 Speaker 3: of money. So this bucket is about resilience, adaptation. We 256 00:15:09,680 --> 00:15:13,640 Speaker 3: can fund a lot of those things. The third bucket 257 00:15:14,040 --> 00:15:17,520 Speaker 3: is the smallest bucket, addressing the loss and damage. 258 00:15:17,720 --> 00:15:21,320 Speaker 1: Right, if you don't reduce emissions and you don't adapt 259 00:15:21,360 --> 00:15:26,080 Speaker 1: to warming, then you will get damages from climate impacts. 260 00:15:26,280 --> 00:15:28,800 Speaker 3: That's right, and there's a fair amount of those damages 261 00:15:29,720 --> 00:15:32,680 Speaker 3: in which you have to respond. All of your low 262 00:15:32,680 --> 00:15:36,400 Speaker 3: income homes have lost their roof, they've washed away, and 263 00:15:36,480 --> 00:15:39,600 Speaker 3: these are people who do not have any resources, do 264 00:15:39,640 --> 00:15:43,120 Speaker 3: not have any ability to ensure. Insurance companies are not 265 00:15:43,160 --> 00:15:47,200 Speaker 3: going to ensure them. So they're no revenues and they're 266 00:15:47,200 --> 00:15:50,960 Speaker 3: no savings. So we can't borrow for this, so we 267 00:15:51,080 --> 00:15:56,480 Speaker 3: need grants. So the grand bit we've made the smallest 268 00:15:56,520 --> 00:15:59,440 Speaker 3: bit possible. We've shrunk it. It's not a two point 269 00:15:59,440 --> 00:16:03,720 Speaker 3: four trillion dollar task, but it's one hundred billion dollar task. 270 00:16:04,400 --> 00:16:08,240 Speaker 3: And we recognize that governments don't have one hundred billion 271 00:16:08,280 --> 00:16:11,240 Speaker 3: dollars stuff behind the sofa EID budgets are not going 272 00:16:11,280 --> 00:16:13,480 Speaker 3: to double, they're not going to increase from two hundred 273 00:16:13,520 --> 00:16:17,200 Speaker 3: billion to three hundred billion, So we need new revenue streams. 274 00:16:17,440 --> 00:16:21,920 Speaker 3: That's something like an emissions tax in the shipping industry. 275 00:16:22,720 --> 00:16:27,080 Speaker 3: Shipping is a significant part of emissions increases. There's a 276 00:16:27,120 --> 00:16:30,720 Speaker 3: proposal for a one hundred dollars per ton of carbon 277 00:16:31,160 --> 00:16:34,720 Speaker 3: as a result of emissions in the shipping industry. That 278 00:16:34,800 --> 00:16:38,960 Speaker 3: would fund the third of that bucket. Oil and coal exports. 279 00:16:39,000 --> 00:16:41,360 Speaker 3: If there was a small levee on those exports, a 280 00:16:41,440 --> 00:16:44,640 Speaker 3: one percent levee, that would fund the other two thirds. 281 00:16:45,000 --> 00:16:47,560 Speaker 3: So that's how we deal with that third bucket. 282 00:16:47,720 --> 00:16:49,920 Speaker 1: And you're going to bring these solution sets under the 283 00:16:49,960 --> 00:16:54,280 Speaker 1: Bridgetown Agenda two point zero to a summit in Paris 284 00:16:54,400 --> 00:16:58,840 Speaker 1: this month, which is aimed at using the solution set 285 00:16:58,840 --> 00:17:01,840 Speaker 1: to try and fix the global financial architecture and not 286 00:17:01,880 --> 00:17:06,000 Speaker 1: just address climate change, but other crises like inequality and 287 00:17:06,080 --> 00:17:12,679 Speaker 1: loss of biodiversity. But sticking to the climate solution, let's 288 00:17:12,800 --> 00:17:16,480 Speaker 1: walk through the most complicated and the largest bucket, which 289 00:17:16,720 --> 00:17:21,800 Speaker 1: is to try and make private capital move to poor 290 00:17:21,840 --> 00:17:26,200 Speaker 1: countries at a much faster rate, at a bigger volume 291 00:17:26,680 --> 00:17:30,840 Speaker 1: every year for the rest of this century. Why is 292 00:17:30,880 --> 00:17:33,680 Speaker 1: it not already happening? Because you get to hear these things, 293 00:17:33,680 --> 00:17:36,639 Speaker 1: which is solar is the cheapest form of electricity you 294 00:17:36,680 --> 00:17:39,439 Speaker 1: can get anywhere in the world, especially in countries like 295 00:17:39,520 --> 00:17:43,360 Speaker 1: India and other developing countries within the tropics, the places 296 00:17:43,400 --> 00:17:47,040 Speaker 1: that have the impact. If that's the case, why does 297 00:17:47,040 --> 00:17:47,920 Speaker 1: the money not flow? 298 00:17:48,240 --> 00:17:51,440 Speaker 3: So there are two problems of the idea that renewable 299 00:17:51,560 --> 00:17:57,440 Speaker 3: energy is free and easy and cheap. There are two problems. Firstly, 300 00:17:57,720 --> 00:18:00,879 Speaker 3: they're very capital intensive, so I've got to buy the land, 301 00:18:01,240 --> 00:18:05,160 Speaker 3: I've got to buy the panels, I've got to erect 302 00:18:05,160 --> 00:18:08,920 Speaker 3: them and connect them, and that's very cap intensive. Most 303 00:18:08,960 --> 00:18:12,840 Speaker 3: of that is foreign currency required for that. And then 304 00:18:12,880 --> 00:18:16,960 Speaker 3: I'm getting revenues for the solar farm in local currency. 305 00:18:17,400 --> 00:18:20,520 Speaker 3: So I have a big bill that's a foreign currency 306 00:18:20,520 --> 00:18:25,280 Speaker 3: bill and paying for it through local currencies. So foreign 307 00:18:25,280 --> 00:18:28,159 Speaker 3: investors need to be involved because they're the ones with 308 00:18:28,200 --> 00:18:32,680 Speaker 3: the foreign currency and they look at this country and 309 00:18:32,720 --> 00:18:35,600 Speaker 3: they say, well, you know, there's risks of the project, 310 00:18:35,680 --> 00:18:41,400 Speaker 3: But the solar farms are pretty standard tech today, win farms, hydroelectric. 311 00:18:42,000 --> 00:18:45,440 Speaker 3: There isn't really a tech problem. The problem is that 312 00:18:45,800 --> 00:18:50,080 Speaker 3: the country may have a currency risk, there may be 313 00:18:50,280 --> 00:18:56,080 Speaker 3: a credit risk, and if you unpack the risks involved 314 00:18:56,080 --> 00:19:00,359 Speaker 3: in that investment. It's not tech, it's not the project, 315 00:19:00,040 --> 00:19:02,760 Speaker 3: it is currency in credit. 316 00:19:03,359 --> 00:19:07,960 Speaker 1: So these risks, which we can understand as macro risks, 317 00:19:08,160 --> 00:19:11,000 Speaker 1: come in different from one that is easy to understand. 318 00:19:11,040 --> 00:19:11,840 Speaker 3: Is political risk. 319 00:19:12,119 --> 00:19:14,480 Speaker 1: The country may be a democracy, but may have a 320 00:19:14,680 --> 00:19:18,439 Speaker 1: military dictatorship just sitting in the back, which comes in 321 00:19:18,520 --> 00:19:21,879 Speaker 1: and there is a problem. There could be regulatory changes 322 00:19:21,960 --> 00:19:25,280 Speaker 1: made because there's been a change in the party that 323 00:19:25,400 --> 00:19:28,600 Speaker 1: rules the country. Those are political risks that you can 324 00:19:28,720 --> 00:19:33,320 Speaker 1: kind of understand. But what does currency risk mean? Currency 325 00:19:33,400 --> 00:19:37,560 Speaker 1: risks are an interesting basket which collects almost all of 326 00:19:37,560 --> 00:19:42,320 Speaker 1: those other country type risks. So if the change your 327 00:19:42,320 --> 00:19:46,960 Speaker 1: government creates uncertainty, your currency tends to fall. If people 328 00:19:46,960 --> 00:19:50,200 Speaker 1: are uncertain whether you could pay your debts, your currency falls, 329 00:19:50,720 --> 00:19:55,919 Speaker 1: and so currencies are very volatile. And when institutional investors 330 00:19:55,920 --> 00:19:59,840 Speaker 1: in America in Europe invest, they want to hedge themselves 331 00:20:00,040 --> 00:20:04,800 Speaker 1: from these kinds of risks that they're unfamiliar with. Hedging 332 00:20:04,880 --> 00:20:08,440 Speaker 1: involves one company paying another company for a risk they 333 00:20:08,520 --> 00:20:11,560 Speaker 1: don't want to take. For example, if you're an American 334 00:20:11,600 --> 00:20:14,359 Speaker 1: investor with assets in India and you're worried that the 335 00:20:14,359 --> 00:20:17,199 Speaker 1: Indian rupee could fall in value, you would ask a 336 00:20:17,240 --> 00:20:19,439 Speaker 1: bank to take care of that risk for you. If 337 00:20:19,480 --> 00:20:21,560 Speaker 1: the rupee does fall, the bank will deal with the 338 00:20:21,600 --> 00:20:24,679 Speaker 1: losses and you'll still get the exchange rate you agreed 339 00:20:24,760 --> 00:20:27,480 Speaker 1: with the bank. If the rupee rises in value, the 340 00:20:27,520 --> 00:20:30,800 Speaker 1: bank makes money, but you still get the same exchange rate. 341 00:20:31,119 --> 00:20:33,920 Speaker 1: You the investor, don't have to be worried about currency risk, 342 00:20:34,119 --> 00:20:36,720 Speaker 1: and the bank has a service it can make money. 343 00:20:36,480 --> 00:20:41,840 Speaker 3: Off institutional investors in America in Europe, they'll say, I'm 344 00:20:41,920 --> 00:20:44,760 Speaker 3: in the energy sector, and I understand energy. I'm in 345 00:20:44,760 --> 00:20:47,520 Speaker 3: the tech sector. I understand tech. I don't understand the 346 00:20:47,680 --> 00:20:50,560 Speaker 3: South African rand. I'm not an expert in that or 347 00:20:50,640 --> 00:20:53,600 Speaker 3: the Indonesian rupea and so I want to hedge myself 348 00:20:53,600 --> 00:20:57,280 Speaker 3: from those risks. And the hedging costs basically eat up 349 00:20:57,800 --> 00:21:01,119 Speaker 3: about two thirds to three quarters of the return, and 350 00:21:01,160 --> 00:21:05,800 Speaker 3: so what they're left with the hedged return is measly 351 00:21:06,119 --> 00:21:08,959 Speaker 3: like a three to four percentage point return. And if 352 00:21:08,960 --> 00:21:12,240 Speaker 3: you're an institutional investor, you're thinking, why add that to 353 00:21:12,280 --> 00:21:15,320 Speaker 3: my portfolio. I want a seven or eight percent return 354 00:21:15,920 --> 00:21:16,399 Speaker 3: at least. 355 00:21:16,720 --> 00:21:19,240 Speaker 1: Let's take an example of a project to be able 356 00:21:19,280 --> 00:21:25,120 Speaker 1: to understand these numbers, because it gets easier if we focus, 357 00:21:25,119 --> 00:21:28,520 Speaker 1: say on a solar plant in South Africa, a developing 358 00:21:28,560 --> 00:21:32,560 Speaker 1: country that has a very coal heavy electricity sector, but 359 00:21:33,040 --> 00:21:37,199 Speaker 1: is willing and is big participant in the global system 360 00:21:37,240 --> 00:21:40,639 Speaker 1: to try and address this problem through finance. So say 361 00:21:41,240 --> 00:21:46,160 Speaker 1: you were building a solar plant in South Africa, give 362 00:21:46,200 --> 00:21:49,639 Speaker 1: it ten million dollars. Now what is it that I, 363 00:21:49,840 --> 00:21:52,120 Speaker 1: the private investor who would like to invest in your 364 00:21:52,119 --> 00:21:55,080 Speaker 1: solar plant, need to think about? And why would I 365 00:21:55,200 --> 00:21:57,679 Speaker 1: choose you over a solar plant I could build in 366 00:21:57,720 --> 00:21:58,120 Speaker 1: the UK. 367 00:21:59,000 --> 00:22:03,679 Speaker 3: So you're not so much worried about solar. But the 368 00:22:03,720 --> 00:22:07,840 Speaker 3: problem is that you, the investor, are only prepared to 369 00:22:07,920 --> 00:22:11,680 Speaker 3: go if the return not only gives you the same 370 00:22:11,720 --> 00:22:15,080 Speaker 3: return you'd get for solar farm in Germany, say, but 371 00:22:15,320 --> 00:22:20,160 Speaker 3: an additional return for all of the additional risks, the 372 00:22:20,160 --> 00:22:24,880 Speaker 3: currency risk, the credit risk, the political risk. And when 373 00:22:24,920 --> 00:22:28,119 Speaker 3: you take all of those risks out, it's hard for 374 00:22:28,160 --> 00:22:30,600 Speaker 3: those projects to give you the return that you want. 375 00:22:31,520 --> 00:22:33,560 Speaker 3: So we need to find a way of hedging those 376 00:22:33,680 --> 00:22:39,720 Speaker 3: risks cheaper to make the returns more attractive. And there's 377 00:22:39,720 --> 00:22:42,080 Speaker 3: a way we can do it. Because if you observe 378 00:22:42,160 --> 00:22:43,680 Speaker 3: in a case of so Africa is a good one. 379 00:22:44,280 --> 00:22:47,440 Speaker 3: You know, the cost to hedge the currency risk that 380 00:22:47,480 --> 00:22:50,800 Speaker 3: the South African currency is called the rand. The rand 381 00:22:50,840 --> 00:22:55,040 Speaker 3: is a fairly volatile currency and it costs you, you know, 382 00:22:55,280 --> 00:23:01,000 Speaker 3: eight to nine percent to eliminate the risk of loss 383 00:23:01,400 --> 00:23:04,080 Speaker 3: from the currency eight to nine percent per. 384 00:23:03,960 --> 00:23:06,639 Speaker 1: Year, which means that if I were making say a 385 00:23:06,680 --> 00:23:09,560 Speaker 1: profit of five percent on my German solar farm, I 386 00:23:09,560 --> 00:23:13,080 Speaker 1: would need to make a profit of fourteen percent in 387 00:23:13,119 --> 00:23:17,320 Speaker 1: South Africa for those projects to be comparable for the 388 00:23:17,359 --> 00:23:20,600 Speaker 1: financial written that I, the investor is getting from the 389 00:23:20,640 --> 00:23:21,800 Speaker 1: solar plant. Is that right? 390 00:23:21,920 --> 00:23:27,439 Speaker 3: Exactly, same tech, same project. It can make five percent 391 00:23:27,520 --> 00:23:30,040 Speaker 3: in Germany. The equivalent deman it needs to make in 392 00:23:30,080 --> 00:23:33,879 Speaker 3: South Africa to attract me is fourteen percent. Because I 393 00:23:34,000 --> 00:23:36,920 Speaker 3: got to take out nine percentage points of that fourteen 394 00:23:37,359 --> 00:23:39,240 Speaker 3: And why do you have to take out nine because that's 395 00:23:39,359 --> 00:23:43,359 Speaker 3: all the currency risk and the credit risks for me 396 00:23:43,480 --> 00:23:46,720 Speaker 3: investing in South Africa. The thing is that when we 397 00:23:46,800 --> 00:23:49,640 Speaker 3: look back in time, the actual risk, so how much 398 00:23:49,640 --> 00:23:53,119 Speaker 3: did the currency fall? It wasn't nine percent. It was 399 00:23:53,240 --> 00:23:55,080 Speaker 3: in a case of South Africa, it was like four percent. 400 00:23:56,240 --> 00:24:00,000 Speaker 3: So I'm over paying for that risk by five percentage 401 00:24:00,040 --> 00:24:03,879 Speaker 3: points per year. If I didn't overpay for that risk, 402 00:24:04,800 --> 00:24:07,760 Speaker 3: that project could have yielded me not a five percent return, 403 00:24:07,920 --> 00:24:09,480 Speaker 3: but a ten percent return. 404 00:24:09,720 --> 00:24:12,280 Speaker 1: That sounds like somebody left money on the table, which 405 00:24:12,320 --> 00:24:17,680 Speaker 1: is to say markets usually the whole idea of them 406 00:24:18,000 --> 00:24:23,680 Speaker 1: is through their functioning, will find the most efficient way 407 00:24:23,840 --> 00:24:27,320 Speaker 1: to make these hedges possible, which is to say, there 408 00:24:27,320 --> 00:24:30,160 Speaker 1: should not be a gap between what happened in reality 409 00:24:30,560 --> 00:24:33,199 Speaker 1: and what kind of risk they hedged. So why is 410 00:24:33,240 --> 00:24:38,080 Speaker 1: it that they are overpaying for these hedges if the 411 00:24:38,119 --> 00:24:41,000 Speaker 1: reality of the currency risk is not appearing. 412 00:24:41,160 --> 00:24:45,440 Speaker 3: I think it's a couple reasons. You might argue that 413 00:24:45,520 --> 00:24:50,760 Speaker 3: there's an uncertainty premiere that South Africa's one of one 414 00:24:50,840 --> 00:24:54,479 Speaker 3: hundred and ninety two countries, and people aren't investing heavily 415 00:24:54,520 --> 00:24:56,400 Speaker 3: to be experts in so Africa because they've got other 416 00:24:56,440 --> 00:24:59,080 Speaker 3: countries to look at, and so they feel that there 417 00:24:59,119 --> 00:25:01,320 Speaker 3: are risks out there which they don't fully understand, and 418 00:25:01,359 --> 00:25:07,880 Speaker 3: there's uncertainty. Then also the investment may make a return 419 00:25:08,040 --> 00:25:12,479 Speaker 3: in the long run, but in the intervening period it 420 00:25:12,520 --> 00:25:17,600 Speaker 3: could be quite volatile, and investors tend to be risk averse. 421 00:25:18,760 --> 00:25:21,800 Speaker 3: They don't like to use a lot of capital money 422 00:25:21,840 --> 00:25:25,080 Speaker 3: that they can absorb a loss, and so they don't 423 00:25:25,200 --> 00:25:27,679 Speaker 3: like even if you offer them a nice return at 424 00:25:27,680 --> 00:25:30,680 Speaker 3: the end, they don't like the fact that they would 425 00:25:30,720 --> 00:25:33,760 Speaker 3: have had a few loss or few heartbeats along the way, 426 00:25:34,240 --> 00:25:36,800 Speaker 3: and that they had to carry a lot of this 427 00:25:36,960 --> 00:25:40,280 Speaker 3: loss absorbing amount of spare cash, if you like, in 428 00:25:40,280 --> 00:25:42,959 Speaker 3: the intervening period, they can do more with that money. 429 00:25:43,240 --> 00:25:45,919 Speaker 3: It is what economists we call it a market failure 430 00:25:46,520 --> 00:25:51,360 Speaker 3: because this thing, this activity will make money and will 431 00:25:51,400 --> 00:25:54,199 Speaker 3: have a huge social benefit, could save the planet. Right, 432 00:25:54,280 --> 00:25:57,840 Speaker 3: you can't get bigger than that. But there's other things 433 00:25:57,880 --> 00:26:00,080 Speaker 3: the private sector could do with their money, right, and 434 00:26:00,119 --> 00:26:01,000 Speaker 3: they could make more. 435 00:26:00,840 --> 00:26:03,359 Speaker 1: Money, and that's doing some of the short term versus 436 00:26:03,359 --> 00:26:05,720 Speaker 1: the long term. In the short term and on a 437 00:26:05,800 --> 00:26:08,199 Speaker 1: year to year basis or even five year basis, they 438 00:26:08,280 --> 00:26:11,359 Speaker 1: don't want to be seen as making losses, even though 439 00:26:11,480 --> 00:26:14,359 Speaker 1: overall in the thirty year life of this solar planet 440 00:26:14,359 --> 00:26:15,840 Speaker 1: they will make more money. 441 00:26:15,920 --> 00:26:19,240 Speaker 3: You're right, But it's also the fact that it may 442 00:26:19,280 --> 00:26:22,679 Speaker 3: make money, but it may not make enough money because 443 00:26:22,720 --> 00:26:26,040 Speaker 3: they can do other things with their money. So simply 444 00:26:26,080 --> 00:26:29,720 Speaker 3: saying it's profitable isn't enough. If there are other things 445 00:26:29,720 --> 00:26:31,800 Speaker 3: that are more profitable. Well, the reason why we call 446 00:26:31,800 --> 00:26:36,800 Speaker 3: it a market failure is a it's profitable privately, there's 447 00:26:36,800 --> 00:26:40,080 Speaker 3: a private return to be had, but socially there's a 448 00:26:40,200 --> 00:26:43,600 Speaker 3: huge return to be had. So there's a social return 449 00:26:43,640 --> 00:26:47,080 Speaker 3: that's being lost because the private sector is finding that 450 00:26:47,080 --> 00:26:49,439 Speaker 3: there are other things which there's a better private return. 451 00:26:50,280 --> 00:26:52,679 Speaker 3: So that's a classic example of where we need to 452 00:26:53,160 --> 00:26:56,760 Speaker 3: kind of align the social return and the private return 453 00:26:57,000 --> 00:26:59,800 Speaker 3: to get private savings invested in this. 454 00:27:00,600 --> 00:27:04,399 Speaker 1: So we're talking here about getting investors from abroad to 455 00:27:04,440 --> 00:27:07,440 Speaker 1: come into countries like South Africa. But what is it 456 00:27:07,640 --> 00:27:10,879 Speaker 1: with countries like India, which are large economies which could 457 00:27:11,040 --> 00:27:14,480 Speaker 1: just have their own central banks, create their own money, 458 00:27:14,760 --> 00:27:18,040 Speaker 1: lend it out to their own private players. Why do 459 00:27:18,119 --> 00:27:21,480 Speaker 1: they have to rely on foreign investors, especially if it's 460 00:27:21,480 --> 00:27:22,320 Speaker 1: a large economy. 461 00:27:22,359 --> 00:27:25,280 Speaker 3: Well, I think that a couple of reasons. Firstly, even 462 00:27:25,560 --> 00:27:29,360 Speaker 3: though it's a large country, there's a large need and 463 00:27:29,680 --> 00:27:34,440 Speaker 3: savings are good in India, but they're not bountiful the 464 00:27:34,600 --> 00:27:38,000 Speaker 3: other things that those sigments could do. And if you 465 00:27:38,080 --> 00:27:40,639 Speaker 3: remember earlier, we talked about the fact that there's a 466 00:27:40,720 --> 00:27:44,760 Speaker 3: foreign currency requirement because they may need to import the 467 00:27:44,800 --> 00:27:48,960 Speaker 3: tech and the panels and a range of things. I mean, 468 00:27:49,040 --> 00:27:53,280 Speaker 3: India is investing. Our issue isn't that some countries aren't investing. 469 00:27:53,320 --> 00:27:56,720 Speaker 3: They're just not investing fast enough. They may feel the 470 00:27:56,800 --> 00:27:59,600 Speaker 3: investing in the right pace for them, and it may 471 00:27:59,640 --> 00:28:02,879 Speaker 3: be the right pace for their economy is just not 472 00:28:02,960 --> 00:28:05,320 Speaker 3: the right pace for the planet. So we need to 473 00:28:05,560 --> 00:28:10,040 Speaker 3: turbo charge that investment by making it cheaper and easier 474 00:28:10,040 --> 00:28:10,920 Speaker 3: and more profitable. 475 00:28:16,320 --> 00:28:18,760 Speaker 1: So far, we've talked about the problem Avinash is trying 476 00:28:18,760 --> 00:28:21,919 Speaker 1: to solve, and with the Bridgedown initiative, he thinks he 477 00:28:22,080 --> 00:28:25,119 Speaker 1: has a solution that's coming up right after the break 478 00:28:35,840 --> 00:28:38,640 Speaker 1: through the Bridgedown agenda to point out, you say that 479 00:28:39,000 --> 00:28:42,760 Speaker 1: with this currency hedge risk solution, and let's talk about 480 00:28:42,800 --> 00:28:45,560 Speaker 1: the solution, you could move as much as one point 481 00:28:45,640 --> 00:28:51,920 Speaker 1: five trillion dollars of private capital into climate oriented solutions 482 00:28:52,360 --> 00:28:55,680 Speaker 1: that would be profit making on an annual basis. So 483 00:28:55,800 --> 00:28:56,719 Speaker 1: what is the solution. 484 00:28:57,200 --> 00:29:00,160 Speaker 3: The solution is that we have an agency that that 485 00:29:00,240 --> 00:29:03,640 Speaker 3: sits in the WARL Bank and the IMF. The agency 486 00:29:03,960 --> 00:29:06,640 Speaker 3: is a not for profit. It is not trying to 487 00:29:06,760 --> 00:29:09,640 Speaker 3: make money. It is trying to make sure there's no 488 00:29:09,880 --> 00:29:14,600 Speaker 3: overpayment to hedge these risks. It's not saying they're no risks. 489 00:29:14,840 --> 00:29:17,120 Speaker 3: It's not saying there's a cost for the risk. It's 490 00:29:17,160 --> 00:29:23,680 Speaker 3: eliminating the over payment. The overpayment will substantially cut the 491 00:29:23,720 --> 00:29:27,160 Speaker 3: cost of hedging and significantly boost the rate of return. 492 00:29:27,320 --> 00:29:30,040 Speaker 3: The rate of return of these projects now will jump 493 00:29:30,240 --> 00:29:32,320 Speaker 3: from say a four percent rate of return, which is 494 00:29:32,400 --> 00:29:35,680 Speaker 3: uninteresting for investors, to more like a nine percent rate 495 00:29:35,720 --> 00:29:39,000 Speaker 3: of return, which is suddenly a classic kind of return 496 00:29:39,440 --> 00:29:43,920 Speaker 3: to fit into international portfolios of investment FRO an investor 497 00:29:44,000 --> 00:29:47,160 Speaker 3: point of view, You suddenly got something as interesting to 498 00:29:47,200 --> 00:29:51,320 Speaker 3: ignite the excitement of the private sector today. The rate 499 00:29:51,360 --> 00:29:55,000 Speaker 3: of return is too low, too uncertain, too risky. 500 00:29:55,200 --> 00:29:58,280 Speaker 1: But there is already an organization, as I understand, called 501 00:29:58,360 --> 00:30:02,800 Speaker 1: TTHX you're in Europe, that was funded by development agencies. 502 00:30:02,960 --> 00:30:07,480 Speaker 1: These are agencies that give money to developing countries for projects, 503 00:30:07,920 --> 00:30:11,440 Speaker 1: and it does currency risk hedging and it makes a 504 00:30:11,440 --> 00:30:15,920 Speaker 1: small profit. Why do you think you need a different institution? 505 00:30:16,040 --> 00:30:19,520 Speaker 1: Couldn't DCX just be made bigger and solve the problem. 506 00:30:19,840 --> 00:30:24,240 Speaker 1: TCX finds you the market hedging price. We're saying the 507 00:30:24,280 --> 00:30:27,760 Speaker 1: market hedging price is wrong. The market hedging price is 508 00:30:27,800 --> 00:30:31,000 Speaker 1: an over payment for the risk, an over payment by 509 00:30:31,040 --> 00:30:35,720 Speaker 1: half t SX doesn't have the capital or liquidity to 510 00:30:35,800 --> 00:30:38,960 Speaker 1: basically say the market you're wrong. I'm going to hang 511 00:30:39,000 --> 00:30:42,200 Speaker 1: out here and offer you a different exchange rate for 512 00:30:42,400 --> 00:30:45,760 Speaker 1: billions of dollars of types of projects that is four 513 00:30:45,800 --> 00:30:48,440 Speaker 1: or five percentage points per year different than the market rate, 514 00:30:48,680 --> 00:30:50,760 Speaker 1: because I know that in the long run I'll be okay, 515 00:30:51,680 --> 00:30:54,560 Speaker 1: and you're taking this risk. The IMF and will Bank 516 00:30:54,600 --> 00:30:57,120 Speaker 1: can do it because if they get it right, they 517 00:30:57,160 --> 00:30:58,920 Speaker 1: may even make a little bit of money. They get 518 00:30:58,960 --> 00:31:02,120 Speaker 1: it wrong, it's had a huge social benefit and that 519 00:31:02,240 --> 00:31:05,800 Speaker 1: is their actual remit and their mandate. So if you succeeded, 520 00:31:05,840 --> 00:31:08,800 Speaker 1: you create this institution within the World Bank and the 521 00:31:08,840 --> 00:31:12,000 Speaker 1: International Monetary Fund that's a not for profit that does 522 00:31:12,040 --> 00:31:15,800 Speaker 1: the currency hedge risk. So now you're saying, suddenly, my 523 00:31:16,720 --> 00:31:21,160 Speaker 1: investment in the solar farm in South Africa becomes attractive 524 00:31:21,680 --> 00:31:25,000 Speaker 1: compared to my investment in a German solar farm, just 525 00:31:25,040 --> 00:31:28,280 Speaker 1: because that five percent has now been absorbed by this 526 00:31:28,400 --> 00:31:31,560 Speaker 1: new body that you've created. How much money does that 527 00:31:31,600 --> 00:31:34,320 Speaker 1: body need to have to be able to manage this 528 00:31:34,480 --> 00:31:39,520 Speaker 1: kind of currency hedge risk in one hundred and fifty countries, 529 00:31:39,560 --> 00:31:42,200 Speaker 1: which your class is developing countries in the world today. 530 00:31:42,400 --> 00:31:47,120 Speaker 3: So if what we were suggesting was a subsidy, that 531 00:31:47,200 --> 00:31:51,560 Speaker 3: would limit its scale, because subsidies mean actually it's a 532 00:31:51,600 --> 00:31:55,880 Speaker 3: code word for grants, and grants are not unlimited. But 533 00:31:56,000 --> 00:31:59,040 Speaker 3: what we're saying is this is not a subsidy. This 534 00:31:59,080 --> 00:32:02,600 Speaker 3: is removing the over payment. This is saying we want 535 00:32:02,760 --> 00:32:06,640 Speaker 3: the price of the risk to ex post after the 536 00:32:06,680 --> 00:32:10,040 Speaker 3: event to be equal to the actual cost of the risk. 537 00:32:11,200 --> 00:32:14,640 Speaker 3: At the moment, the price of the risk is substantially 538 00:32:14,720 --> 00:32:18,160 Speaker 3: bigger than the actual risk. And so if I'm not 539 00:32:18,640 --> 00:32:21,400 Speaker 3: doing something that is a subsidy, it's not a grant, 540 00:32:21,960 --> 00:32:26,000 Speaker 3: it actually is something in the long run is profitable, 541 00:32:26,840 --> 00:32:31,160 Speaker 3: then I can be unlimited in my scale. I can 542 00:32:31,240 --> 00:32:35,000 Speaker 3: scale up to the amount of the investment the world needs, 543 00:32:36,000 --> 00:32:38,680 Speaker 3: which is about one point five trillion dollars per year 544 00:32:38,680 --> 00:32:41,680 Speaker 3: of investment. They're not going to need one point five 545 00:32:41,720 --> 00:32:44,480 Speaker 3: trillion of hedging. But this is a key point because 546 00:32:45,200 --> 00:32:48,640 Speaker 3: there's always people out there saying we want grants, we 547 00:32:48,720 --> 00:32:52,400 Speaker 3: want subsidies. And one of the messages we're saying, and 548 00:32:52,440 --> 00:32:56,680 Speaker 3: it's a typical bridge down, is saying yes, that will 549 00:32:56,760 --> 00:33:01,080 Speaker 3: be nice, but don't we want scale needs scale, and 550 00:33:01,160 --> 00:33:05,000 Speaker 3: if you focused only on grants, only on people transferring 551 00:33:05,040 --> 00:33:07,680 Speaker 3: money to you, you're never going to get the scale 552 00:33:07,760 --> 00:33:09,240 Speaker 3: we need to save the planet. 553 00:33:09,640 --> 00:33:12,040 Speaker 1: Let's look at a few other solutions in the set 554 00:33:12,080 --> 00:33:15,200 Speaker 1: we talked about the three buckets, and so you'll move 555 00:33:15,280 --> 00:33:18,600 Speaker 1: money through currency risk hedging that will allow private investors 556 00:33:18,600 --> 00:33:22,479 Speaker 1: to invest more money. You'll, for adaptation, increase the amount 557 00:33:22,480 --> 00:33:25,520 Speaker 1: that could be lent and enable that lending to be 558 00:33:25,600 --> 00:33:27,920 Speaker 1: paid for through the savings that the countries will make. 559 00:33:28,240 --> 00:33:31,160 Speaker 1: And there may be some form of emissions tax to 560 00:33:31,160 --> 00:33:34,040 Speaker 1: be able to actually have a smaller amount of grants 561 00:33:34,160 --> 00:33:36,920 Speaker 1: given for damages. But there are other things that you're 562 00:33:36,960 --> 00:33:40,880 Speaker 1: proposing that could also be very beneficial for countries. So 563 00:33:41,120 --> 00:33:45,720 Speaker 1: one thing is, for example, in Barbados, you introduce their 564 00:33:45,880 --> 00:33:49,600 Speaker 1: unnatural Disaster clause in some of your loans or debts 565 00:33:49,640 --> 00:33:52,920 Speaker 1: that you've taken on, and those trigger when a big 566 00:33:52,960 --> 00:33:55,440 Speaker 1: catastrophe happens and then you don't have to make those 567 00:33:55,600 --> 00:33:59,800 Speaker 1: repayments for a period of time. You know, how does 568 00:33:59,840 --> 00:34:04,440 Speaker 1: that help Barbados? And can this be applied to other countries? 569 00:34:04,880 --> 00:34:07,880 Speaker 3: So you know, let's recap we've got a world now 570 00:34:08,200 --> 00:34:13,839 Speaker 3: of that's facing these bigger, more frequent shocks. So we've 571 00:34:13,840 --> 00:34:18,799 Speaker 3: never had before climate related sharks, pandemic shocks, and that 572 00:34:18,920 --> 00:34:21,080 Speaker 3: was the mother of all shocks, right, the last pandemic. 573 00:34:21,360 --> 00:34:23,920 Speaker 3: So the world is now facing more shocks. We've come 574 00:34:24,000 --> 00:34:26,440 Speaker 3: up with a way of trying to mitigate some of 575 00:34:26,440 --> 00:34:29,719 Speaker 3: those shocks, to reduce them, to adapt for them, and 576 00:34:29,800 --> 00:34:32,520 Speaker 3: to come up with loss and damage. But the system 577 00:34:33,480 --> 00:34:38,600 Speaker 3: just needs to be more shock absorbing because of this 578 00:34:39,000 --> 00:34:44,360 Speaker 3: changed world we're in. And shock absorbing doesn't sound very exciting. 579 00:34:43,960 --> 00:34:47,799 Speaker 1: But shock absorbing. Tried driving a car without a shock 580 00:34:47,880 --> 00:34:50,840 Speaker 1: absorber and you know what happened. So it's very important. 581 00:34:50,920 --> 00:34:54,080 Speaker 3: It's very important, but it's particularly important for poor countries 582 00:34:54,239 --> 00:34:57,879 Speaker 3: and poor people. Poor people often live on the edge. 583 00:34:57,960 --> 00:35:01,320 Speaker 3: They may appear to be fine, but it's weeks without 584 00:35:01,360 --> 00:35:05,000 Speaker 3: a job and suddenly they're plunged into poverty. Same with countries. 585 00:35:05,440 --> 00:35:07,920 Speaker 3: So if you're a rich country and you have a shock, 586 00:35:08,080 --> 00:35:11,680 Speaker 3: I mean, you can do quantitative easing, print some cash, 587 00:35:11,840 --> 00:35:15,520 Speaker 3: you can borrow some money. Poor countries can't really do that. 588 00:35:15,560 --> 00:35:18,320 Speaker 3: They don't have reserve currencies either, so in a crisis, 589 00:35:18,640 --> 00:35:23,240 Speaker 3: their currency plunges in a crisis, American and the European 590 00:35:23,239 --> 00:35:27,400 Speaker 3: currencies go up, so they need shock absorbers. So there 591 00:35:27,400 --> 00:35:30,440 Speaker 3: are two types of shock absorbers. There is the public 592 00:35:30,480 --> 00:35:33,759 Speaker 3: sector shock absorber. The international multi fund should behave a 593 00:35:33,840 --> 00:35:36,839 Speaker 3: little bit like a lender of last resort, the way 594 00:35:36,880 --> 00:35:39,960 Speaker 3: a central bank behaves for its local banks. We need 595 00:35:40,000 --> 00:35:42,600 Speaker 3: the IMF to be like a central bank for the 596 00:35:42,640 --> 00:35:46,080 Speaker 3: world and it should offer when is a crisis, a 597 00:35:46,120 --> 00:35:51,440 Speaker 3: facility where you can get emergency cheap quick money. It's limited, 598 00:35:51,960 --> 00:35:56,760 Speaker 3: but it's quick. Secondly, because international capital markets are bigger 599 00:35:56,760 --> 00:35:59,520 Speaker 3: than the IMF could ever be, we need to look 600 00:35:59,560 --> 00:36:04,160 Speaker 3: at the financial instruments that the world has, especially the 601 00:36:04,200 --> 00:36:05,279 Speaker 3: debt instruments. 602 00:36:05,840 --> 00:36:06,719 Speaker 1: So we have. 603 00:36:07,120 --> 00:36:12,080 Speaker 3: We weren't the first. The Caribbean has pioneered natural disaster 604 00:36:12,239 --> 00:36:15,680 Speaker 3: clauses in bonds. Grenadians and Kits were the first. We 605 00:36:15,719 --> 00:36:20,400 Speaker 3: are the world's largest issuer of sovereign bonds with natural 606 00:36:20,400 --> 00:36:24,440 Speaker 3: disaster clauses in them. So these are clauses which says, 607 00:36:25,040 --> 00:36:29,760 Speaker 3: if an independent entity has declared that you have had 608 00:36:29,880 --> 00:36:33,799 Speaker 3: a major national disaster, a hurricane or something else, then 609 00:36:34,200 --> 00:36:37,799 Speaker 3: for two years all of your debt servicing. That means 610 00:36:37,840 --> 00:36:42,480 Speaker 3: your interest payments, your repayment of the debt that's suspended 611 00:36:42,560 --> 00:36:45,640 Speaker 3: for two years. You get this breathing space for which 612 00:36:45,680 --> 00:36:49,040 Speaker 3: you can focus on the disaster. And then all of 613 00:36:49,080 --> 00:36:52,200 Speaker 3: that debt service that was suspended is added back on. 614 00:36:52,719 --> 00:36:56,240 Speaker 3: At the end of the instruments, the instrument becomes automatically 615 00:36:56,280 --> 00:36:59,120 Speaker 3: two years longer, and you've got to pay some interest 616 00:36:59,160 --> 00:37:01,759 Speaker 3: for that period of time, which was the same as 617 00:37:01,760 --> 00:37:06,279 Speaker 3: the interest beforehand. And so it provides you liquidity. It's 618 00:37:06,280 --> 00:37:11,000 Speaker 3: not free money, it's liquidity. It's reshuffling the payments to 619 00:37:11,120 --> 00:37:14,080 Speaker 3: give you the breathing space when you need it. The creditor, 620 00:37:14,560 --> 00:37:17,320 Speaker 3: the person who lent you the money, is no worse off. 621 00:37:17,440 --> 00:37:20,680 Speaker 3: They get all their payments back plus interest, but they 622 00:37:20,800 --> 00:37:24,560 Speaker 3: just have they've allowed a different shift in the timing, 623 00:37:25,040 --> 00:37:28,239 Speaker 3: and that's so important for dealing with the crisis. Nobody 624 00:37:28,320 --> 00:37:31,000 Speaker 3: gives us the amount of liquidity that we would get 625 00:37:31,040 --> 00:37:36,000 Speaker 3: from these instruments. If a disaster hits Barbados. This this 626 00:37:36,120 --> 00:37:40,400 Speaker 3: saves us eighteen percent of our GDP one eight percent 627 00:37:40,440 --> 00:37:45,439 Speaker 3: of our GDP. All the other multilateral development banks put 628 00:37:45,480 --> 00:37:49,279 Speaker 3: together offer us all kinds of contingency lending. They come 629 00:37:49,360 --> 00:37:53,680 Speaker 3: up to about two percent. So this really is a 630 00:37:53,719 --> 00:37:57,480 Speaker 3: life changer. If every developing country had them during the pandemic, 631 00:37:57,520 --> 00:38:01,759 Speaker 3: for example, it would have given them one trillion dollars 632 00:38:01,880 --> 00:38:04,960 Speaker 3: of liquidity to deal with the pandemic. In the end, 633 00:38:05,239 --> 00:38:09,360 Speaker 3: development countries, because they had no liquidity and no ability 634 00:38:09,440 --> 00:38:12,760 Speaker 3: to get extra cash, they only spent all of them 635 00:38:13,160 --> 00:38:16,520 Speaker 3: half a trillion on a health crisis. This would have 636 00:38:16,520 --> 00:38:19,080 Speaker 3: given them one trillion. They could have spent twice as much. 637 00:38:19,400 --> 00:38:21,839 Speaker 1: You're going to take this idea bridged on Agenda two 638 00:38:21,880 --> 00:38:24,480 Speaker 1: point zero to Paris in front of world leaders and 639 00:38:24,520 --> 00:38:27,359 Speaker 1: you're trying to get them to agree. 640 00:38:27,320 --> 00:38:30,200 Speaker 3: That this is the solution. Said they should back who 641 00:38:30,280 --> 00:38:34,920 Speaker 3: is on your side. Bridgetown is about setting the pace 642 00:38:34,920 --> 00:38:41,719 Speaker 3: of ambition. It's not about gathering signatures. We came up 643 00:38:41,719 --> 00:38:44,000 Speaker 3: with a global plan. We thought it would trigger other 644 00:38:44,040 --> 00:38:46,959 Speaker 3: people coming up with global plans, and we would nick 645 00:38:47,200 --> 00:38:49,440 Speaker 3: the best ideas of all the other plans and make 646 00:38:49,480 --> 00:38:52,560 Speaker 3: our plan better. But we've still remain principally the only 647 00:38:52,600 --> 00:38:56,320 Speaker 3: plan because too many countries are already focused on their interests. 648 00:38:56,320 --> 00:38:58,799 Speaker 3: They find it very hard to come up with a 649 00:38:58,880 --> 00:39:02,719 Speaker 3: global plan the world. It's easy for us, being the 650 00:39:02,760 --> 00:39:04,880 Speaker 3: canaries of the mind to say well, we've got a 651 00:39:04,880 --> 00:39:07,839 Speaker 3: plan to save the mind, because that's important for us. 652 00:39:08,160 --> 00:39:11,560 Speaker 3: So we're not looking for people to sign up. We're 653 00:39:11,560 --> 00:39:17,120 Speaker 3: looking to push people on their ambition to normalize socialized ideas, 654 00:39:17,160 --> 00:39:19,799 Speaker 3: to discuss them and debate them, and to make them 655 00:39:19,840 --> 00:39:23,879 Speaker 3: think deeply on why not If you really do think 656 00:39:23,880 --> 00:39:25,560 Speaker 3: this is important? Why not? 657 00:39:26,120 --> 00:39:29,520 Speaker 1: But these institutions, the World Bank and the IMF were 658 00:39:29,560 --> 00:39:33,120 Speaker 1: created decades ago at a time that was very, very 659 00:39:33,120 --> 00:39:36,680 Speaker 1: different from today. You've said, in effect that from the 660 00:39:36,719 --> 00:39:40,759 Speaker 1: conception there were fundamental problems with these institutions. There have 661 00:39:40,800 --> 00:39:44,360 Speaker 1: been many attempts to try and reform them, and small 662 00:39:44,520 --> 00:39:47,319 Speaker 1: changes have been made, But why do you think this 663 00:39:47,480 --> 00:39:50,840 Speaker 1: time around they will change. 664 00:39:51,080 --> 00:39:53,839 Speaker 3: I think we have a moment today. I'm not sure 665 00:39:53,920 --> 00:39:57,440 Speaker 3: exactly why that is. I think Bridge Down has helped 666 00:39:57,440 --> 00:40:01,760 Speaker 3: to create that moment, but many other have. The enormous 667 00:40:01,800 --> 00:40:08,200 Speaker 3: tragedy of Pakistan last year, thirty million people homeless, twenty 668 00:40:08,320 --> 00:40:13,480 Speaker 3: seven thousand schools underwater. I think the heat waves and 669 00:40:13,520 --> 00:40:17,160 Speaker 3: the flooding in Europe and America has helped to create 670 00:40:17,200 --> 00:40:21,480 Speaker 3: that moment. I think the nature of the current US administration, 671 00:40:21,760 --> 00:40:26,000 Speaker 3: European governments, we've had a US Treasury secretary saying we 672 00:40:26,120 --> 00:40:28,360 Speaker 3: need to go from billions to trillions. Well, to be 673 00:40:28,480 --> 00:40:32,000 Speaker 3: quite frank, we've never had a US Treasury secretary say 674 00:40:32,040 --> 00:40:38,759 Speaker 3: that before. I think also, the system is broken and 675 00:40:39,600 --> 00:40:43,680 Speaker 3: it's clear that if we don't fix it, somebody else 676 00:40:43,719 --> 00:40:49,080 Speaker 3: will replace it. You know, we've fumbled along with a 677 00:40:49,160 --> 00:40:53,880 Speaker 3: forty system for a long time. But now they're alternatives, 678 00:40:54,480 --> 00:40:58,680 Speaker 3: and people are presenting alternatives, and we are seeing that 679 00:40:58,719 --> 00:41:03,080 Speaker 3: what was previously in open trading system, governments are championing 680 00:41:03,160 --> 00:41:07,400 Speaker 3: an alternative trading system. You're seeing that happening with debt. 681 00:41:07,520 --> 00:41:11,840 Speaker 3: We've got a global debt restructuring process that is being changed. 682 00:41:12,080 --> 00:41:16,560 Speaker 3: It's different. So I think people realized that the stakes 683 00:41:17,120 --> 00:41:20,720 Speaker 3: are bigger than ever before, which is that this system, 684 00:41:21,040 --> 00:41:25,359 Speaker 3: if it's not fixed, will just be brushed away as irrelevant. 685 00:41:26,280 --> 00:41:29,400 Speaker 3: And at the core of the system our institutions established 686 00:41:29,880 --> 00:41:33,959 Speaker 3: around nineteen forty five now the world. In nineteen forty five, 687 00:41:34,440 --> 00:41:38,279 Speaker 3: the European Empires were still largely intact. India doesn't get 688 00:41:38,280 --> 00:41:42,040 Speaker 3: its independence until a few years later, so the vast 689 00:41:42,080 --> 00:41:46,440 Speaker 3: majority of countries today did not exist back in nineteen 690 00:41:46,440 --> 00:41:49,360 Speaker 3: forty five, and in nineteen forty five. The problem was 691 00:41:49,440 --> 00:41:53,720 Speaker 3: rebuilding Europe after the war, the idea of climate change, 692 00:41:54,200 --> 00:41:59,880 Speaker 3: of pandemics, of inequality, those things were not forefront in 693 00:42:00,120 --> 00:42:04,160 Speaker 3: their agenda. They've evolved over time and they've become much 694 00:42:04,200 --> 00:42:08,520 Speaker 3: more focused on poverty in the poorest countries. But the 695 00:42:08,560 --> 00:42:12,359 Speaker 3: world is also evolved. We need to fix the system, 696 00:42:12,520 --> 00:42:15,880 Speaker 3: and we need to change its focus and its remit 697 00:42:16,360 --> 00:42:19,719 Speaker 3: and most importantly, we need to scale it up. It 698 00:42:19,800 --> 00:42:24,120 Speaker 3: is so tiny it is irrelevant. It is irrelevant today. 699 00:42:24,600 --> 00:42:27,120 Speaker 3: We need to say, the total all of the multilateral 700 00:42:27,160 --> 00:42:30,800 Speaker 3: debump banks put together lend about one hundred billion dollars. 701 00:42:30,840 --> 00:42:33,120 Speaker 3: Remember the figure we used at the beginning. We need 702 00:42:33,160 --> 00:42:35,680 Speaker 3: two point four trillion dollars. We need to get that 703 00:42:35,800 --> 00:42:38,759 Speaker 3: lending up from one hundred billion to four hundred or 704 00:42:38,800 --> 00:42:41,600 Speaker 3: five hundred billion. We need to scale it up. 705 00:42:41,800 --> 00:42:45,080 Speaker 1: Who is presenting alternatives to the World Bank and IMF 706 00:42:45,239 --> 00:42:47,400 Speaker 1: that could brush these institutions aside. 707 00:42:47,680 --> 00:42:53,880 Speaker 3: The international system is being replaced, not by a grand plan, 708 00:42:55,440 --> 00:43:01,520 Speaker 3: but being chipped away. So today it's irrelevant. Today when 709 00:43:01,520 --> 00:43:05,600 Speaker 3: people want investment, you've got the World Bank, but you've 710 00:43:05,600 --> 00:43:08,240 Speaker 3: got a number of other people coming to you offering money, 711 00:43:09,840 --> 00:43:11,719 Speaker 3: offering money on good terms. 712 00:43:12,200 --> 00:43:14,400 Speaker 1: I meanash doesn't say it, but the elephant in the 713 00:43:14,480 --> 00:43:17,799 Speaker 1: room is China. Since twenty fifteen, China has offered one 714 00:43:17,880 --> 00:43:21,480 Speaker 1: hundred and eighty five billion dollars in assistance to countries 715 00:43:21,560 --> 00:43:27,000 Speaker 1: in debt distress, including Argentina, Pakistan and Nigeria. That's according 716 00:43:27,000 --> 00:43:29,760 Speaker 1: to a study by AID Data. Over the past decade, 717 00:43:29,920 --> 00:43:32,759 Speaker 1: China's overseas bailouts are more than twenty percent of the 718 00:43:32,760 --> 00:43:36,240 Speaker 1: total lending of the IMF, and the amounts are growing, 719 00:43:36,680 --> 00:43:40,200 Speaker 1: providing an alternative source of money to countries that need it. 720 00:43:41,040 --> 00:43:44,160 Speaker 3: You've got a so called Paris Club system of debt 721 00:43:44,360 --> 00:43:48,319 Speaker 3: rescheduling and restructuring, but you've got other people offering debt 722 00:43:48,360 --> 00:43:49,279 Speaker 3: and restructuring it. 723 00:43:49,960 --> 00:43:50,799 Speaker 2: You have a. 724 00:43:50,719 --> 00:43:55,040 Speaker 3: System that is being chipped away because it's irrelevant. So 725 00:43:55,120 --> 00:44:00,000 Speaker 3: if we want to have an international system with international rules, 726 00:43:59,840 --> 00:44:03,640 Speaker 3: there's multilateral it has to work. If developing countries feel 727 00:44:03,680 --> 00:44:06,160 Speaker 3: it's irrelevant to them, that they don't have a voice, 728 00:44:06,600 --> 00:44:10,440 Speaker 3: that it is not suited to their challenges and issues, 729 00:44:10,920 --> 00:44:12,880 Speaker 3: they will listen to anybody else. 730 00:44:13,200 --> 00:44:15,480 Speaker 1: What do the leaders of the World Bank. We have 731 00:44:15,520 --> 00:44:20,040 Speaker 1: a new one in Ajabanga and the IMF Crystallina Georgieva 732 00:44:20,320 --> 00:44:23,120 Speaker 1: think of the Bridgetown to point zero agenda. 733 00:44:23,440 --> 00:44:27,000 Speaker 3: Both of it have expressed support for the Bridgetown initiative. 734 00:44:27,520 --> 00:44:31,479 Speaker 3: Our job is to make their job easier. They'll say 735 00:44:31,480 --> 00:44:36,080 Speaker 3: that they lead institutions that have shareholders who drive policy, 736 00:44:36,480 --> 00:44:40,800 Speaker 3: and we've been focused on influencing the shareholders. 737 00:44:40,440 --> 00:44:44,160 Speaker 1: And those shareholders are essentially the largest economies with the 738 00:44:44,200 --> 00:44:46,120 Speaker 1: largest amount of shareholding. 739 00:44:46,600 --> 00:44:51,279 Speaker 3: Roughly speaking. Yes, the shareholding framework was set back in 740 00:44:51,360 --> 00:44:54,720 Speaker 3: nineteen forty five and it is based it's heavily skewed 741 00:44:55,239 --> 00:45:00,960 Speaker 3: towards the Europe and the United States, and they're quite 742 00:45:01,040 --> 00:45:04,440 Speaker 3: protective of their shareholdings and don't wish them to form. 743 00:45:04,480 --> 00:45:07,279 Speaker 3: But I think it's important to say that one of 744 00:45:07,440 --> 00:45:09,120 Speaker 3: the reasons why we have a moment today is we 745 00:45:09,200 --> 00:45:13,680 Speaker 3: have a leadership of the two main institutions who I 746 00:45:13,719 --> 00:45:18,719 Speaker 3: think want to make sure their institutions are more relevant 747 00:45:18,880 --> 00:45:22,279 Speaker 3: and more relevant to today's new problems. 748 00:45:25,000 --> 00:45:28,040 Speaker 1: Thank you so much. This is a very important topic, 749 00:45:28,160 --> 00:45:32,000 Speaker 1: very complicated topic, but without it you cannot break the deadlock, 750 00:45:32,120 --> 00:45:35,600 Speaker 1: and I'm really glad to have explored those solution sets 751 00:45:35,640 --> 00:45:36,240 Speaker 1: with you today. 752 00:45:36,560 --> 00:45:36,920 Speaker 3: Thank you. 753 00:45:42,200 --> 00:45:44,400 Speaker 1: I'll be heading to Paris next week with my colleagues 754 00:45:44,400 --> 00:45:47,720 Speaker 1: from Bloombergreen to report on the summit, including the reception 755 00:45:47,760 --> 00:45:51,000 Speaker 1: to Avinash's plan. For all the latest visit Bloomberg dot 756 00:45:51,000 --> 00:45:54,279 Speaker 1: com Slash Green. Thanks for listening to Zero. If you 757 00:45:54,440 --> 00:45:57,160 Speaker 1: like the show, please rate, review, and subscribe on Apple 758 00:45:57,200 --> 00:46:00,879 Speaker 1: Podcasts or Spotify. If you enjoyed this week's episode, please 759 00:46:00,880 --> 00:46:03,160 Speaker 1: share it with a friend or someone who's planning a 760 00:46:03,160 --> 00:46:06,040 Speaker 1: trip to the Caribbean. If you've got a suggestion for 761 00:46:06,080 --> 00:46:08,319 Speaker 1: a guest or topic or something you just want us 762 00:46:08,360 --> 00:46:10,839 Speaker 1: to look into, get in touch at Zero pod at 763 00:46:10,880 --> 00:46:14,640 Speaker 1: Bloomberg dot Net. Zero's producer is Oscar Boyd and senior 764 00:46:14,640 --> 00:46:18,120 Speaker 1: producer is Christine Riskell. Our theme music is by Wondering. 765 00:46:18,440 --> 00:46:21,839 Speaker 1: Special thanks this week to Kate McKenzie and Kira Bindram. 766 00:46:21,960 --> 00:46:38,640 Speaker 1: I'm Akshatrati back next week. By the way, your name 767 00:46:38,920 --> 00:46:40,439 Speaker 1: and my name mean the same thing. 768 00:46:41,000 --> 00:46:43,239 Speaker 3: The soul I always having to tell people it's not sol 769 00:46:43,280 --> 00:46:49,040 Speaker 3: at the bottom of your feet soul. Yeah, immortal instructions 770 00:46:49,120 --> 00:46:52,120 Speaker 3: or indestructible. Yeah, well, let's not test